Unhedged – “Three numbers that matter”

Financial Times & Pushkin Industries
Released: December 18, 2025
Hosts: Katie Martin & Robert Armstrong

Episode Overview

This episode of Unhedged delves into the true health of the US economy amid swirling uncertainty following a messy federal government shutdown. Hosts Katie Martin and Robert Armstrong focus on three key metrics shaping markets right now: employment, inflation, and financial system leverage. With plenty of wit, skepticism, and a dose of post-holiday-party honesty, they dissect whether “fine” economic data really means things are on steady ground—or if deeper risks are lurking.

1. Jobs Data: Fine, not Great

Starts at 02:23

• Main Discussion:

  • November jobs data is finally out, delayed by the government shutdown, showing an unemployment rate ticked up to 4.6% (historically low, but trending the wrong way).
  • The jobs report is split into two parts:
    • Household Survey: Asks individuals if they’re employed, fired, or worked part time; showed a volatile uptick in temporary layoffs.
    • Establishment Survey: Asks businesses if they’re hiring; October saw a sharp drop (mainly due to government layoffs), while November rebounded mildly in private sectors.
  • The presenters agree job additions are “fine”—better than “meh”, but not spectacular.
  • Structural shifts (lower immigration, aging demographics) may mean fewer job additions are required to keep the labor market steady.

• Key Quotes:

  • “The headline…the FT landed on…was a higher unemployment rate at 4.6%. That is a relatively low historic number. But the trend is going the wrong direction.” – Robert Armstrong (02:23)
  • “In this low immigration, aging economy, it may be that just 10 or 20 or 30,000 job additions is enough to…keep the unemployment rate going sideways.” – Robert Armstrong (05:13)
  • “It’s a bit better than meh.” – Katie Martin (05:06)

• Notable Segment:

  • Discrepancy between expectations (fewer immigrants = more jobs for US citizens) and reality: “That’s not happening right now… What we know is that’s not happening.” – Robert Armstrong (06:07)

2. Retail Sales & Consumer Spending: Just ‘Okay’

Starts at 06:19

• Consumer Confidence:

  • Retail sales are steady; inflation-adjusted, spending is up 1-2% year over year—“not spectacular, not accelerating, but it’s not falling through the floor.”
  • Cars are a weak spot, but excluding volatile categories like autos and petrol, the backdrop is stable.
  • The “paradox of thrift”—where households cutting back could become self-fulfilling economic gloom—isn’t fully in play…yet.

• Key Quote:

  • “Retail spending…is growing 1 or 2% year over year, which is okay.” – Robert Armstrong (07:19)

3. Inflation: A Pleasant Surprise, But Don’t Celebrate Too Soon

Starts at 07:48

• Latest Data:

  • November inflation came in at 2.7% (lower than the 3.1% forecast).
  • Key driver: Housing (shelter) costs, which are controversial due to data lags and collection methods.
  • Services inflation remains above target (in the 3%+ range), so it’s not “mission accomplished.”

• Future Risks:

  • Katie expresses concern that tariffs and other factors could reignite inflation later in 2026.
  • Lower inflation makes it easier for the Fed to cut rates, but policy risk lingers:
    • Discussion turns humorous—and pointed—on the potential for a Trump-appointed Fed chair:
      • “I believe you said…we should get used to the idea that the next Fed chair will be Donald Trump wearing comedy glasses and pretending to be an economics professor.” – Robert Armstrong (10:24)
      • “It’ll be whoever does what Donald Trump wants him to do. That’s who it will be.” – Katie Martin (10:41)
      • Armstrong pushes back, suggesting that the Fed chair role is more insulated from political pressure than other appointments.

• Summing up inflation risk:

  • “To summarize, we’re above target for inflation now. The trend is sideways, maybe a tiny bit down if you squint. Next year, we get fiscal support and possibly monetary support, too...Does this push core inflation up a little bit next year and upset the whole house of cards... I think that’s a risk that is not high probability, but is high destructiveness.” – Robert Armstrong (13:02)

4. Market Plumbing: Leverage and Systemic Risks

Starts at 13:24

• Financial Leverage:
  • A rarely discussed but critical number: $3.3 trillion in overnight secured financing (repos), whereby financial players borrow against Treasury holdings.
  • Surging leverage implies the potential for financial overstimulation—amplifying stock market rallies and, potentially, feeding inflation.
  • “There is some reason...we have a hot stock market next year, and that makes inflation risk worse.” – Robert Armstrong (13:36)

5. Long/Short: Festive Gripes and Guilty Pleasures

Starts at 15:33

Hosts pick things they’re “long” (like) or “short” (dislike):

• Robert Armstrong:
  • Short Wham!’s “Last Christmas”
    • “If every recording of that song were to be lost in a fire, I would rejoice.” (15:54)
• Katie Martin:
  • Short Amusing Wall Street Festive Videos
    • Calls out Blackstone’s annual Christmas video: “It is cringe as an asset class. It’s where funny goes to die. It’s painful to watch.” (16:17)

6. Memorable Moments & Tone

• The camaraderie & candor—including Armstrong’s playful jibes at Martin’s “slightly hungover” state (00:36), and their mutual eye-rolling about government missteps and market optimism.
• Satirical forecast for a Trump-appointed Fed chair in “comedy glasses.”
• Both hosts present “fine” as the reluctant verdict of 2025’s data: good enough for now, but not truly reassuring.
• A thread of underlying skepticism—reminding listeners not to “declare victory” on inflation yet, and to watch for lurking risks in leverage and policy.

Key Timestamps

• 02:23 – Jobs data breakdown
• 06:19 – Retail sales & consumer sentiment
• 07:48 – November inflation surprise
• 10:24 – Joking about a Trumpist Fed chair
• 13:24 – Systemic financial leverage
• 15:33 – Long Short segment

Summary Takeaway

The US economy of late 2025 is muddily “fine.” Job growth is stalled but not shrinking, consumer spending is tepid but stable, and inflation has unexpectedly cooled...for now. Yet foundational risks—ranging from political appointments to the scale of market borrowing—mean that “fine” is a word laced with anxiety. The episode ends with holiday humor but leaves listeners with a sober warning not to mistake stable data for lasting safety.